Journal
EUROPEAN ECONOMIC REVIEW
Volume 75, Issue -, Pages 131-155Publisher
ELSEVIER
DOI: 10.1016/j.euroecorev.2015.01.011
Keywords
Weak ties; Strong ties; Urban Economics; Labor market
Categories
Funding
- Japan Society for the Promotion of Science
- French National Research Agency [ANR-2011-BSH1-014-01]
- Grants-in-Aid for Scientific Research [24730208] Funding Source: KAKEN
Ask authors/readers for more resources
We develop a model where the unemployed workers in the city can find a job either directly or through weak or strong ties. We show that, in denser areas, individuals choose to interact with more people and meet more random encounters (weak ties) than in sparsely populated areas. We also demonstrate that, for a low urbanization level, there is a unique steady-state equilibrium where workers do not interact with weak ties, while, for a high level of urbanization, there is a unique steady-state equilibrium with full social interactions. We show that these equilibria are usually not socially efficient when the urban population has an intermediate size because there are too few social interactions compared to the social optimum. Finally, even when social interactions are optimal, we show that there is over-urbanization in equilibrium. (C) 2015 Elsevier B.V. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available